“We use more than we have or need and much is wasted on lawns that don’t belong or dumped into the ocean.” –Megan Baeherens, Executive Director San Diego Coastkeeper, personal communication, November 20, 2013.
The purpose of this section is to explore how the QSA has opened up spaces of
accumulation through the urbanization of capital in San Diego County. Specifically, I explore ways in which the water transfer has not only secured the conditions for the expanded
reproduction of capital through the production and consumption of water as a use value, but has also turned water into a site of accumulation itself. In doing so, I develop an
understanding of the role of the QSA in deepening the commodification of water, as it specifically relates to various forms of the marketized production and distribution of water.
First, the water transfer has led to a number of capital investment projects for urban water supply infrastructure in order to accommodate water supply from the Imperial Valley. While the price paid to the IID for Imperial Valley water coupled by water infrastructure projects have on their own significantly increased costs of production of urban water, the financing of these capital projects through market-based financial instruments has inexorably pushed the costs of raw water even higher. Second, the rising costs of production of urban water has direct implications for the provision of water services, as it creates upward pressure on tariffs charged to urban users, especially in the context of full cost water pricing policies. In other words, the water transfer and accompanying infrastructure projects not only secure
conditions for the expanded reproduction of capital, but also create new forms of
accumulation as the financing for the latter is secured through the revenue from water sales.
Between 1950 and 2013, California’s population has more than tripled from 10 million to about 38 million (Johnson, 2014). The majority of Californians live in or close to urban metropolises. However, the characterization of who constitutes an urban versus a rural dweller is vague and hard to define (Villarejo, 2011). While residential suburbs far from employment centers make for long commutes and increased traffic congestion, they remain attractive for residents seeking more affordable housing opportunities (San Diego Housing Federation, 2015). Suburban expansion into what are considered more rural areas tends toward larger homes with larger lawns, which consumes an extravagant amount of water
(Brennan, 2014). An example of this can be found in a neighborhood in San Diego County, Rancho Santa Fe, which has one of the highest home water uses levels in the state, almost 600 gallons per person per day in August and September 2014. Profligate water use consumption in suburbs puts a strain on the water supply system of San Diego.
San Diego has a Mediterranean climate, with cool wet winters and warm dry summers, receiving an average of about 10.34 inches of rainfall a year. San Diego
experienced one of its driest periods in 2013-2014 when rainfall was about 5.5 inches below the average (Murphy, 2014). Between and 1940 and 2014, San Diego County’s population increased from 290,000 to 3.15 million, and is expected to grow by 48% between 2000 and 2050 (SANDAG, 2011). Blame for the overallocation and depletion of water resources is placed on population growth and development. However, the amount of water used in California has not increased as significantly as overpopulation explanations suggest (P. H.
Gleick et al., 2003; Hanak et al., 2009)
San Diego exhibits several characteristics of urban sprawl. “Uncontrolled growth” in the 1970s through the 1990s created economically stratified communities separated by an extensive freeway system (Hogan, 2003). In 2003, San Diego had the lowest availability of affordable homes in the state (Showley, 2003); currently, it takes an income of $54,160/year to afford a “typical two bedroom apartment” in San Diego County (San Diego Housing Federation, 2015). Per capita income averages $49,700 (San Diego Regional EDC, 2015).
The accelerating rate of suburbanization has dramatically shaped how patterns of water use materialize in different ways in San Diego County, and sustained the particular socio-ecological order that has arisen out of historical and contemporary patterns of capitalist development in the region. San Diego has the largest concentration of people employed by
the military in the world, particularly the U.S. Navy and Marine Corps (San Diego Regional EDC, 2015). Other major industries include tourism, biotech, and information technologies.
Both San Diego and Los Angeles have played dominant roles in shaping water management in Southern California. In 1931, San Diego had a fifth priority right to 112,000 AF/year of Colorado River water. In order to utilize this allocation San Diego County either had to establish a connection with MWD’s existing infrastructure, or build its own pipeline to the Imperial Valley. While business owners in the City of San Diego and agricultural
interests in North San Diego County disagreed on the “best” way to get water to the region, the Navy and the Department of Defense (DOD) preempted the decision. The Navy’s presence in San Diego increased substantially during World War II, and the DOD wanted to expand that presence even further. This required more growth in the region, and, of course, more water. By 1945 the military was using almost 50% of the water delivered in San Diego (Sholders, 2002). The DOD drove up demands for water, and promoted the establishment of a regional water authority in order to secure an abundant water supply for the region, and particularly to fulfill its development agenda (Gottlieb & FitzSimmons, 1991). In 1944, the San Diego County Water Authority (SDCWA) was formed to manage water resources in the region. Threats of a shortage in 1945 led to the appointment of a committee by the President of the U.S. to recommend methods to secure supplies in the region (Sholders, 2002). While the committee concluded that connecting to the MWD’s water supply network would provide the San Diego region with a reliable supply of water, the SDCWA rejected the idea.
Subsequently, the MWD threatened to make its own deal with North County interests, which along with pressure from the DOD, forced the incorporation of the SDCWA into the MWD and the forfeiture of their fifth priority Colorado River right established in 1946. Continued
military activity during the Cold War further expanded the regions need for water supplies to sustain its growth (Gottlieb & FitzSimmons, 1991). San Diego County relied on imported water from MWD for almost 95% of its supply before the QSA was signed. The water was moved through the California Aqueduct and the Colorado River Aqueduct to the MWD, then on to San Diego’s water supply system.
Water pricing in Southern California underwent a major shift in the late 20th century.
Water rates, initially based on the idea of economies of scale, as use increases, prices decrease, did not promote conservation. These “declining block” rates, as well as
all-inclusive “postage-stamp” rates were restructured. In the 1980s the MWD was no longer able to rely on tax subsidies as a large part of their revenue stream. This caused operating deficits and forced MWD to raise its rates, forcing retail agencies to raise theirs (Gottlieb &
FitzSimmons, 1991). Water rates have been steadily increasing since 1989. SDCWA’s rates rose the most between 2008 and 2014, as shown in Table 5. In 2003, the rate structure changed to include new fixed rates, the Customer Service Charge, and the Storage Charge. It also divided the variable costs into Tier 1 (Untreated) and Tier 2 (Treated), effectively unbundling San Diego’s rates from its pre-2003 “postage-stamp” rates (San Diego County Water Authority, 2014). It was determined by unbundling these rates “levels of service”
could be developed. So now if a member agency does not wish to pay for treated water, it does not have to. Rate categories that SDCWA charges its member agencies consist of customer service, storage, supply, transportation and treatment. North County agencies sued over the change, but were defeated in court. In 2006, the capital and operating costs from a new treatment facility, and a Financial Management Amendment increased rates. In 2010 and
2011, the formulas used to determine rates were altered. In 2010 and 2011, with the implementation of these changes, rates increased by 18.1% and by 11.3% respectively.
Table 5. San Diego County Water Authority All-In Treated Rate 1989-2015, Source:
SDCWA
The overall rate increases are due to a number of factors, including the economic downturn that led to lower water consumption, increased costs of MWD supplies, costs of the IID transfer, capital and infrastructure improvement costs, emergency storage projects, drought, construction of the desalination plant, and legal fees (D. Stallman, personal communication, December 3, 2014).
The effects of uneven development, especially in relation to water, are not limited to the Imperial Valley. The QSA transfer has dramatically increased the costs of the production of water for the SDCWA. The San Diego County Water Authority pays almost $600/acre-foot of IID water (San Diego County Water Authority, 2014). This rate will continue to increase over the term of the QSA. They also must pay for environmental and
socio-economic mitigation, as stipulated in the QSA Joint Powers Authority (JPA). State mandates to promote water conservation through water pricing, increasing costs of water imported from MWD and the Imperial Valley, as well as litigation expenses, have created a
constellation of forces that have led the SDCWA to adjust water rates accordingly. Rising rates will impact some San Diego residents who may not be able to afford their water bills.
In 2014, the City of San Diego implemented a four tiered rate structure by charging those who use more water a higher rate. Single-family households are charged a $40.62 base fee, plus the amount of water used. For example, if a household consumes 0-8 hundred cubic feet (HCF) per month the charge is $3.896 per HCF, while monthly water consumption falling in the range of 9-24 HCF the charge is $4.364 per HCF (City of San Diego Public Utilities, 2015). However, tiered water rates can only go so far. The city cannot offer
assistance for water bills due to Propositions 218 and 26 which do not allow property-related services, like water, to be subsidized for one customer while charging another customer more (D. Stallman, personal communication, December 3, 2014). Tiered rate structures are
designed to promote conservation; however they are what David Stallman, Supervising Economist at the City of San Diego, refers to as a “double edged sword”. Water agencies must absorb large fixed costs while relying on variable income from water sales to pay for those costs.
The SDCWA collects revenues from water sales, property taxes, infrastructure access charges, and investment income. Its expenses include the cost of sales, operations and
maintenance administration, amortization, debt issuance, interest expense, and other miscellaneous costs. Rates are determined by the capital and operating costs of producing and distributing water services in order to pay expenses. Since the Authority is a public entity, it must adhere to California law and the County Water Authority Act. The Authority cannot charge more than necessary to “cover the reasonable costs of the governmental activity” (State of California, 2010). The SDCWA includes fixed and variable costs in its
rate structure. For instance, in 2015, the rates for treated and untreated water that SDCWA has set for its member agencies are respectively $1,337/AF and $1,059/AF. The MWD charges $923/AF for full-service water to recover the cost of maintaining a reliable amount of supply. (Metropolitan Water District, 2014).
Water consumption and demand, on the other hand, have largely decreased (Table 6).
Table 6. Water Authority Service Area Water Use 1990-2013, Source: SDCWA
On the one hand, water usage has declined in the industrial sectors (22% 2003-2004, 12.6%
2012-2013), as shown in Table 7. The heaviest industrial users in San Diego are Kelco (kelp), the U.S. Navy, and biotech firms. On the other hand, municipal water use has increased in San Diego over the past few years, likely due to higher demand during drought periods (D. Stallman, personal communication, December 3, 2014). Loss and leakages, while not accounted for, are estimated at about 3-6% a year.
Table 7. Allocation of Water Use in San Diego County 2000-2013, Source: SDCWA
The overall decrease in water use, and thus revenues from water sales, is what SDCWA now recognizes as a “new normal” of decreased sales, increased conservation mandates from the state, continued economic stress and “rate payer fatigue” (SDCWA, 2013). Higher rates trickle down to the member agencies that then supply water to municipal and industrial or agricultural users.
Rate increases are portrayed as inevitable, with expensive projects or conservation being the only ways to save water (H. Razak, personal communication, October 3, 2013; M.
Baerhens, personal communication, November 20, 2013). Environmentalists emphasize the need for water management that promotes a water conservation ethic in order to avoid
scarcity, arguing that one of the main drivers of water waste is that water is too cheap (Porter, 2014), such that there is no incentive to conserve, even in an extreme drought. They assert that the current tier structure in San Diego is not steep enough to promote any meaningful conservation, while recognizing that there should be an affordable way for everyone to have
their basic water needs met. They want those who use more to pay more. However, the processes behind rate increases need to be examined closely. The logics behind diversifying water supplies have increased the cost of water in San Diego County. The construction of infrastructure to store more imported water from the Imperial Valley through financial
arrangements such as the Capital Improvement Project and Emergency Storage Project reveal how the QSA has opened new spaces for capital investment in San Diego. By pursuing regional water independence from the MWD, which conforms with state water reforms, water supply has been turned into a new arena for capital accumulation and the processes behind these policies have been neutralized.
The SDCWA is continually looking to expand and diversify its sources of water supply, see Figure 3, as are its retail agencies. In 2009, the state mandated a reduction in urban per capita use by 20% by 2020, and Governor Brown’s recent implementation of mandatory conservation measures will require agencies to look for new ways to conserve (Megerian, Stevens, & Boxall, 2015). Wholesalers do not have to comply with this measure, which puts the pressure to diversify supplies on retail agencies (M. Watton, personal
communication, November 4, 2013). Wholesalers are encouraged to assist the retail agencies they supply in meeting this goal.
Figure 3. San Diego County Water Supply Reliability through Diversification, Source:
SDCWA
The SDCWA relies on its $3.1 billion Capital Improvement Project (CIP) and Emergency Storage Project (ESP) to protect and shore up water supplies for the future.
Increases in imports required new facilities and infrastructure to store them. This increases costs, and thus increases rates. The Capital Improvement Project, first approved in 1989, set aside funds to reline pipes, update metering facilities, and expand aqueduct capacity.
Constant revisions to the CIP add new projects and replace or delay old ones. The SDCWA funds its projects through short-term debt, tax-exempt commercial papers, and long-term debt such as revenue bonds. In 2014, the Water Authority received $15 million from Proposition 84 to fund projects in the CIP and ESP. Long-term bonds that are tax-exempt have lower interest rates, because the federal government subsidizes part of the interest payments as part of a stimulus package in 2009. In 2013, short and long term debt stood at
$360 million and $2 billion respectively (San Diego County Water Authority, 2013). The Emergency Storage Project (ESP) is a means to respond to periods of scarcity and crisis if there is an interruption in supplies. Between 2000 and 2018, storage capacity will increase
90,100 AF by raising the San Vincente dam, filling Olivenhain Reservoir, relining, and expanding various pipelines, increasing groundwater storage in water banks, and building new pumping stations. The total cost of the project is estimated at $1.5 billion (San Diego County Water Authority, 2014).The San Vincente Dam was raised 117 feet in 2014 to
increase storage by 100,000 acre-feet. The reservoir is projected to be full in two to five years with imported water from the QSA transfer (San Diego County Water Authority, 2014).
Future projects include a possible conveyance pipeline from the All-American Canal in the Imperial Valley directly to San Vincente Reservoir (Carollo, 2013). However, further development on this project is on hold until financial and legal matters between the MWD and SDCWA are settled. The 2013 San Diego County Water Authority Master Plan Update reveals plans for the execution of water supply development projects before 2035 (the current planning horizon), and an increase in conveyance capacity is recommended to “optimize reservoir filling and drawdown needs” (SDCWA, 2013). This will most likely add to the list of CIP projects as well as continue to increase costs as the SDCWA searches for more ways to diversify their supplies.
During the drought of 1987-1991, according to Zetland (2009), MWD had no real plan in place to address the level of scarcity brought on by the drought, and had to cut their supplies and increase their rates. This tactic, however, caused conflict among their member agencies. According to the SDCWA, this was the impetus for them to seek their own supplies, and reduce their dependency on their unreliable supplier.
Currently, San Diego and MWD are in court over the rates to “wheel” or transport the water from the IID to San Diego. The SDCWA asserts that MWD is overcharging while some believe MWD is actually subsidizing the costs of wheeling water through its aqueduct
system (Erie, 2006). The SDCWA relationship with MWD is described as being at “absolute freezing” (M. Watton, personal communication, November 4, 2013). San Diego has a
preferential right to 15% of MWD water, but some at SDCWA think that MWD is an insurance policy for Los Angeles. If San Diego pays more, Los Angeles pays less (K.
Weinberg, personal communication, November 13, 2013). Steve Erie 11 contests that MWD is actually subsidizing the transfers, and that San Diego is desperately trying to lower their rates. According to Ken Weinberg (personal communication, November 13, 2013), Director of Water Resources at SDCWA, MWD water is still cheaper than transfer water, but San Diego is more concerned with the long term reliability of the water than its cost. They are banking on the cost of MWD supplies surpassing the costs of the transfer water (D. Stallman, personal communication, December 3, 2014). A judge ruled in favor of the SDCWA in 2014.
The second phase of the trial has yet to be determined, and could go on for years. Litigation only adds to the increases in costs.
How water rates are determined in California and San Diego is highly debated. Pro-market advocates argue that the best way to price rates is to let the Pro-market decide, since they consider water to be way too “cheap”. Some environmental organizations, such as San Diego Coastkeeper,12 believe that rates need to be more steeply tiered where those who use more water pay more, while still making the bottom tier affordable enough for those with low
11 Steve Erie is a professor of political science at UC San Diego who has written extensively on this subject; see Beyond Chinatown (2006) and Paradise Plundered (2011).
12 Coastkeeper is an environmental organization in San Diego that promotes the protection and restoration of water resources and ecosystems in San Diego.
incomes. They argue that current water rates do not incentivize conservation, and that market-based solutions are one way to address conservation issues. How fixed and variable
incomes. They argue that current water rates do not incentivize conservation, and that market-based solutions are one way to address conservation issues. How fixed and variable